Libya's oil impasse

Report summary

Since mid-2014, two competing governments and militias allied to them have contested Libya's legitimacy. With neither side holding the military balance of power, a stalemate has ensued. The eastern House of Representatives (HoR) assembly has set up a parallel rival National Oil Company (NOC) and Central Bank in an attempt to dominate oil revenues and side-line the Tripoli based NOC and Central Bank, two of the last functioning state institutions. So far, its attempts to persuade IOCs and crude buyers bypass the capital have failed. IOCs will likely continue to honour contracts signed with the Tripoli based NOC under western pressure and the uncertain legality of dealing with a new eastern entity. Libya's oil production has declined steeply again since recovering from the civil war of 2011. We anticipate a long-drawn out recovery, punctuated by stop-start production as militias use oil and gas infrastructure to leverage influence.